| Characteristics |
Margin Pledge |
MTF Pledge |
| Meaning |
Margin Pledge meaning is simple - traders can pledge their Demat account securities as collateral to avail extra margin. A pledge margin works similarly to a collateral loan. |
The Securities and Exchange Board of India (SEBI) has mandated that if a trader purchases shares under the Margin Trading Facility (MTF), they must pledge their shares to continue holding their position. |
| Where to use it? |
A margin pledge is used against existing securities in the Demat account. |
The MTF Pledge is used against the shares purchased under MTF. |
| What is the timeline? |
Traders can use margin pledges whenever they seek to avail of additional margins. |
Traders must pledge the securities purchased under the margin trading facility before 9 p.m. on the day the purchase is made. |
| What if you miss the timeline? |
You may pledge the securities anytime, according to your margin requirements. |
If you miss pledging the securities purchased under the margin trading facility before 9 p.m. on the day of purchase, your position will get squared off automatically on the T+7 day. |
| Which securities can be pledged? |
The following approved securities can be pledged under the margin pledge.
- stocks
- Mutual funds
- Sovereign Gold Bonds
- Exchange-traded funds
|
Only approved equity shares can be pledged under the MTF pledge. |